Every body loves to provide for their family. It is perhaps the very reason many of us struggle so hard. There are plenty of people who leave their family so that they can provide them a little extra.
Non- resident Indians are one of the biggest sources of foreign income to India. These people struggle hard to send money to family. We intend to just provide such new NRIs an idea of how they can send money to India. Let me warn you that it is not a detailed post but just an overview for new NRIs.
Outward remittance is the process of transferring money in foreign exchange. Indian residents’ and NRIs utilize the outward remittance to transfer money to a recipient situated in the country or outside the country. It is feasible to carry the transaction according to the Foreign Exchange Management Act (FEMA).
The purpose for the transfer includes education, emigration,investments, employment, maintenance cost to relatives and family members, medical treatment, gifts, donations, etc.
Major financial institutions’ and brokers approved by the RBI handle the transactions and offer the service by charging a nominal fee. Banking organizations provide extensive support to their customers and non-account holders. Account holders’ use the internet banking transactions to carry the fund transfer.
Non-account holders have to approach their banking organization or a third-party agent to transfer the money. In the case of a third-party broker, the conversion fee is less, and the service charges are high. For this reason, it attracts less interest among those who wish to transfer money.
In addition to the limitation, non-account holders’ also have a cap on the maximum amount they can transfer. The variation changes from bank to bank. In addition, the payee should submit residence proof and identity at the time of outward remittance request.
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How NRIs can send or remit money to India to India
Indians working abroad and settled have an important task at all times – financial management back at the home. Whether paying a utility bill or tuition fees, transferring money to family is a vital task and service for non-resident Indians.
Outward remittance to India is available from leading banking organizations and agents. It is imperative to understand the advantages and disadvantages of the modes available and the conditions for the same to ensure that the transfer of the money is safe, secure and with minimal costs.
Many people consider the exchange rate and service charge as a critical aspect while sending money to India. Before the technological evolution, wire transfer and agent-based transfers were popular. However, the changing face of the banking world across the globe has changed this practice. People now use the internet banking to send money to their family and elsewhere right from their home.
These days, the online transaction is receiving much importance due to various advantages it offers. A simple click of the button completes the transaction, and the recipient receives the money within a day or two (depending on the business working days, holidays, amount and bank).
You can choose from the three following procedures that assist in transferring the money to India.
- Wire Transfers:
You can utilize the wire transfer procedure to transfer money from your local bank account to a recipient bank account in India. Also known as SWIFT, it requires you to visit your local branch and fill the application containing the details of the consignee.
Although the process is advantageous, the charge levied by the bank is unknown until the completion. The costs depend on the exchange rate and the third-party correspondent banks cost. Usually, the fees are high, and your branch does not provide the time limit for completion of the transaction. SWIFT transfer requires at least 2-3 days for completing the transaction .
- Agent-based transfer:
Apart from banking and financial institutions’, third-party agents like UAE Exchange, Western Union possess the ability to transfer the funds. It is the slower mode of transaction and can be used when sending large sums as the cost of transaction is usually fixed. You have to locate an agent in your region and submit the cash and needed documents along with the information on the beneficiary account in India.
The agent has connections in India and usually contacts them with the stated amount of transfer within India. Although the process is efficient, accepting the process depends on your urgency. Agent-based services attract fewer people because of high remittance charges and low exchange rate.
- Online transfer:
Online money transfers are becoming the need of the hour. With the help of this option, you can comfortably send money from your home. However, the exchange rate, remittance charges, time for completion of the transaction and reputation of the provider require your attention. You have to check these details before choosing the best deal for transferring money to India.
Ensure that the provider is registered and authorized to carry out the remittance activity. In addition, enquire about the service and make sure that phone support is available. Many providers claim to offer free services. However, they charge fees in the form of service charges and service taxes. Confirm the details before you begin the transaction. Usually if foreign banks are good for this when they have tie-ups with Indian banks. However you’ll not get the best transfer rates.
Chapter 3: Points to remember
With a number of options available to meet the demands of foreigners or NRIs residing in various parts of the globe, banking institutions are offering flexible and convenient options to send money to India from abroad. However, the plethora of choices confuses the remitter. Continue to read below for an idea on the important points that play a crucial role in choosing the best service provider and the preferred mode of transaction.
Speed of disbursement has its role in transferring the money. There are situations where you have an urgency to send money quickly to the beneficiary within a short frame. Under such conditions, you cannot choose the regular remittance offered by your bank, as it takes a week time or even more.
Consider the situation and urgency to determine the best period within which you can transfer the money. National Electronic Funds Transfer (NEFT) offers the transfer within 24-96 hours. However, banking institutions’ collaborated with automated clearing facilities provide direct transfer to bank account in India.
On the other hand, the offline payments consume 4-8 days of time to transfer the amount. Banks verify the details of the remitter before crediting the amount to the beneficiary account. In the case of money orders, the time escalates to 20 days. You have to consider the public holidays in India and operation hours of the bank to speed up the process.
Before choosing the provider, checking the coverage area it offers is important. Not all banks and private agents provide nationwide coverage. There are limitations and, therefore, require your knowledge of choosing the right medium in sending the money. Although all the banks deal with the US dollar, Euro and Pound, only a few entertain the use of foreign currency cheques.
You can also choose the foreign currency (non-resident) account scheme. Under the scheme, you can easily transfer the money from all the major currencies such as Bahrain Dinar, Australian Dollar, Euros, HK Dollar, Japanese Yen, Pounds, the US Dollar, and Kuwaiti Dinar. You can choose the beneficiary as the joint account holder in India.
- Service Cost
Service charge on the remittance changes from the mode of transaction and transaction provider. Before you choose the services, consider checking the service costs and charges levied. Banks charge 1-2% as remittance charge if you select SWIFT mode of transaction based on transfer amount. The rate is flat at 2% if you wish to send the money through demand drafts and cheques.
Private operators such as Western Union and MoneyGram charge more as remittance charge. The high service charge is in tune with the specialized services rendered by the operator. You do not require a bank account, and they have a better reach. The other problematic factor is the low exchange rate offered.
Apart from speed and cost, the other essential factor to consider is the comfort. You have to ensure that the recipient has easy access to the money. If any one of the part is uncomfortable with the internet payment option, choosing offline transaction is feasible. Also, consider the total amount of the transaction before selecting the mode of payment.
Demand drafts attract no limitation on the maximum amount. However, many banks have imposed a maximum of Rs. 5 lakh as the maximum permissible limit while using NEFT services. If you choose MTSS scheme, the maximum amount is Rs. 1.35 lakh. In addition, it is vital to speak to the authority and take a note of the refund policy, in case the money does not credit to the beneficiary at the preferred time.
Sending money to India from abroad is no longer a tough task. The number of options available today makes it easy for you and for anyone else to transfer money from any country. The only hardship that you might find is choosing the best provider and the mode of payment.
To come out of the illusion, consider the urgency of the situation and the beneficiary relationship. If you are transferring money to your parents and if the situation is not urgent, you can consider using the transfer options provided by your agent. Look at the exchange rate and service charge to obtain the best deal in transferring the money. Keep a tab on the fluctuating rates to send a high amount back to home.
You can even open Non-Resident banking account with any one of your parent acting as a joint partner.
The changing conditions and the urgency of the situation define the mode of payment that you can choose from the available options. In case, if you wish to select an agent or money transferring organizations such as Western Union, make it a point to bargain to receive the best exchange rate. In addition, consider the refund policy of the provider.
With a focus on the exchange rate and service charges, choosing preferred mode of payment becomes a stress-free activity. Well, not a detailed post we usually strive to but just felt to write the basics when one of my friends asked me this question. Was it useful for the new NRI? let me know your thoughts.
5 tips to transfer money in India & abroad – Economic Times. (n.d.). Retrieved from http://articles.economictimes.indiatimes.com/2013-01-07/news/36192634_1_money-transfer-doha-bank-indian-banks